Fidelity filed to allow its FETH ETF to stake up to 100% of holdings, distributing rewards as quarterly cash payments to investors.
Fidelity submitted a pre-effective amendment on August 11 to modify its spot Ethereum ETF, FETH, enabling staking of its ETH holdings. The fund may stake up to 100% of its assets, with rewards paid to investors as quarterly cash distributions.
The move follows similar filings by Grayscale and BlackRock after a Treasury and IRS safe harbor clarified tax treatment for staking rewards. FETH currently tracks the Fidelity Ethereum Reference Rate but would shift to include staking yields, potentially outperforming the index before expenses.
Staking involves locking ETH to validate transactions on the Ethereum network, earning new tokens. Fidelity plans to route assets through custodians like Anchorage Digital and BitGo to node operators, with fees split among parties involved.